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Prince Ermolow, an impecunious Russian nobleman marries the beautiful Katja Warsiliewa, who owns a small island in the Caspian Sea, the Isle of Dreams. John P. Knowles, a wealthy American offered buy the island, as it is reported that manganite has been discovered there. Ermolow refuses to sell but gives Knowles a concession to mine for which he draws large royalties. Katja accidentally discovers that no mine is being worked on the island, and distrusting Knowles motives, determines to pay back the money they have received from him. Ermolow, instead of repaying the money with which his wife has entrusted him, attempts to blackmail Ermolow, accusing him of being his wife's lover. Soon after Ermolow is found dead. Suspicions falls on Knowles, but Katja makes a confession of the murder. The real murderer discovered and Knowles realizes that Katja's confession was made to save his life.